A tanker loading crude at Saudi Arabia’s Ras Tanura terminal, bound for a refinery in China’s Shandong province, clears two chokepoints: the Strait of Hormuz and then, four thousand miles later, the Strait of Malacca.
Current Gulf energy policy has understandably concentrated on the first chokepoint and less on the second. That gap was defensible while the Strait of Malacca could be taken for granted. Since February this year it cannot be, and what has been a Southeast Asian concern is now also a Gulf one.
The exposure joining the two is not marginal. The US Energy Information Administration records 23.2 million barrels a day crossing the Strait of Malacca in the first half of 2025, close to 60 percent of it from Saudi Arabia, the UAE, Kuwait and Iraq. When volumes through the Strait of Hormuz fell by nearly six million barrels a day in early 2026, most of that crude was bound for the Strait of Malacca.
The key question is whether the littoral states of Indonesia, Malaysia and Singapore managing the Strait of Malacca, whose arrangements are designed for piracy and navigational safety, can by themselves handle new scenarios thought unimaginable until the US-Iran conflict broke out. Increasingly, experts have started to consider what would happen if the United States blockaded waters along the Strait of Malacca should a US-China conflict erupt.
The economics of maritime coercion
The Islamic Revolutionary Guard Corps (IRGC) showed that mines, uncrewed systems and shore-based missiles could impose severe costs on a waterway’s users without conventional superiority. These are not uniquely Iranian tools, and their use to coerce shipping is a threat to freedom of navigation that other actors may be tempted to imitate.
From mid-March the IRGC vetted foreign-flagged vessels and demanded payment for passage through waters it claimed to control. One transit reportedly cost two million dollars. When the truce brokered at Islamabad lapsed on 17 August, Tehran announced mandatory transit permits and tolls.
The cost showed up in insurance. Strait of Hormuz cover stood at 0.25 percent of hull value before 28 February. Within days the twelve mutual insurers behind most of the world’s tonnage canceled that cover on 72 hours’ notice. By late July the broker Marsh put the cost of cover at 7.5 to 10 percent of hull value. The old baseline is gone, and underwriters are likely to take the same view further east, toward the Strait of Malacca.
Raising the Gulf’s stake in the Strait of Malacca
On 28 July, Oman put to Tehran a plan for the joint management of the Strait of Hormuz funded by voluntary user contributions, modeled on the Strait of Malacca approach of user-funded safety arrangements. Iran rejected it. The proposal differed from the IRGC’s permits and tolls approach in that contributions would be voluntary and pooled for joint management, as at Malacca, whereas the IRGC’s charges are compulsory and unilateral.
What Oman proposed already happens in reverse at the Strait of Malacca, where Gulf states are treated as stakeholders. The Cooperative Mechanism on Safety of Navigation and Environmental Protection in the Straits of Malacca and Singapore (Cooperative Mechanism) has governed safety there since 2007.
The Mechanism gave first effect to Article 43 of the UN Convention on the Law of the Sea: users share a waterway’s upkeep with bordering states. Its Aids to Navigation Fund pays for the buoys and beacons, and only contributors sit on its committee. It counts Saudi Arabia and the UAE among its user states. The UAE’s founding pledge was one hundred thousand dollars.
Old arrangements, new challenges
Participation in the Cooperative Mechanism gives the Gulf a voice on buoys and beacons, but it also opens the door for the region’s players to do more in maritime security.
Policing the Strait of Malacca is a separate matter handled by a dedicated initiative. The Malacca Straits Patrol (MSP), formed in 2004 by Indonesia, Malaysia, Singapore and Thailand, runs coordinated sea patrols, joint air surveillance under Eyes-in-the-Sky, and intelligence-sharing through Singapore’s Information Fusion Centre. Piracy in littoral territorial waters (or more accurately, armed robbery at sea) fell from 80 incidents in the first half of 2025 to 21 this year, which ReCAAP, the region’s piracy reporting center, credits to competent enforcement.
However, the MSP’s original design is reaching its limits. In 2025, some 50 to 70 shadow fleet tankers, aging vessels with obscured ownership, reportedly crossed Malaysian waters each month with sanctioned Iranian crude, picking spots where jurisdictions meet, not where patrols are thin. Since 14 July the United States has blockaded Iranian ports, and by 17 August had reportedly redirected 64 vessels, disabled three and boarded two. A laden tanker with its transponder off is a collision risk in the Strait of Malacca before it is a sanctions case.
Maritime risks in the Strait of Malacca are becoming more complex. An uncrewed underwater vehicle, believed Chinese, was recovered this year in the Lombok Strait, an alternative route to the Strait of Malacca. The MSP can put a patrol boat alongside a suspect craft within the hour, but dealing with submersible threats, let alone the plausible deniability of any state behind them, is far harder.
What follows for the Gulf region
To be sure, the littoral states are not asking for direct involvement of foreign maritime or constabulary forces. Malaysia and Indonesia refused Washington’s 2004 proposal to police the waterway, the Regional Maritime Security Initiative. What the littoral states continue to need is outside financing, equipment and training for national maritime patrols to meet rising safety and security risks.
When the Mechanism’s Co-operation Forum met in Singapore on 25 August, Singapore’s Transport Minister, Jeffrey Siow, emphasized that open sea lanes cannot be taken for granted.
The Forum’s remit is frank and open discussion, and its agenda depends on its members’ inputs. The challenges ahead transcend maritime safety to include security and resilience.
Coupled with Gulf partnership and ideas, elevated investments will go far to raise, train, and sustain the personnel and equipment today’s objectives demand. Gulf producers, whose crude makes up much of the traffic through the Strait of Malacca, could consider deepening their support for its safety and security, through the Aids to Navigation Fund and through equipment and training for the littoral states’ patrols. This is an investment in a shared corridor between a common pool of stakeholders.
